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Wednesday, August 5, 2020
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Types Of Organizational Structure In Business

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Organizational Structure: Know the 4 basic elements

If you own a business, then you are the person responsible for everything, be it earning profits or making losses. If you are eager to hire qualified employees to run your business smoothly and efficiently, then you do require proper business structure and organizational hierarchy. This will help define a chain of command, promotes communication, and allows your employees to know how they can advance their career in your company.

Related Post: 15 Business Statistics You Need to Be Well Aware of Running Small Business

Traditional business structure

There are the following 4 old business structure models. However, with the digital marketplace flourishing at a fast pace, team-based, decentralized structures are found to disrupt the old models. Hence, you need to know in-depth about the old models prior to taking the decision.

Old models practiced

  • Flat organizational structure: In most companies, this model tends to disrupt top-down, traditional managed systems. No everyday ‘boss’ exists as there is decentralized management. Every employee needs to own up the task, thus eliminating red tape, bureaucracy, thus enhancing direct communication. Adopting this business structure will help your company to set up a top-down management system, especially for temporary events or projects.
  • Functional organizational structure: Employees performing similar tasks are classified under the same group based on their specialty. For example, marketing, operations, human resources, senior management, operations, and accountants are classified accordingly. This structure allows taking quick decisions since their effective and timely communication among group members. They also get to learn from one another as they possess similar interests and skills.

Also Read: Alternative Business Financing Options in 2020

Traditional business structure

  • Matrix organizational structure with Divisional & Functional models: Matrix organizational structure is considered to be quite complex as it combines divisional and functional models together. Employees are grouped into functional specialization departments, which are again separated into products and divisional projects. Team members in this structure are provided with more autonomy to take proper and timely decisions and to be more responsible. It helps to improve team productivity and fosters creativity and innovation. Managers can solve problems with inputs from all team members through group interaction. However, such a structure requires plenty of effort and planning. Large companies with adequate resources can find this structure viable.

Also Read: Work-life balance tips for employees

  • A divisional structure that is product-based: Employees are grouped into teams in this business structure into teams, based upon projects or products to meet customized requirements of clients. It promotes division of labor, thus ensuring that employees creating similar products are able to achieve higher output and greater efficiency.

Getting to know the above details can help you to choose the best business structure for your organization.

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